Opposition realises GST is good, yet delays it: Basu

While many may believe the Goods and Services Tax (GST) is being delayed because of serious differences between the Centre and states, Chief Economic Advisor Kaushik Basu has said it is being delayed because even the Opposition realises it is a good reform.

“The problem with the GST reform was that the Opposition realised this was a good reform. Therefore, it was reluctant to let it happen under the current regime,” he said on Friday.

The chief economic advisor said he was misquoted yesterday by the media. A news agency had carried a report on Thursday, quoting Basu as saying major economic reforms in India would hit a roadblock, and were unlikely to be carried out before the next parliamentary elections in 2014.

 

Basu, however, did say he had, in his lecture at Carnegie Endowment on April 18, said problems like delay in the GST would not be faced if a single party secured majority in the next elections. He also recalled he had argued some reforms, such as FDI in multi-brand retail, were likely to happen sooner because in principle, these did not need the support of the Opposition. “...this will give a boost to the mood of the economy,” he had said.

Basu said there was some slowdown in economic reforms and decision-making because of coalition politics. He, however, praised the environment in India which allowed generation and discussion of new ideas without the government having to first endorse these.

“As the chief economic advisor, I have often expressed opinions which are not necessarily that of the ministry of finance or of the government of India,” he said. Giving a gist of his lecture, Basu said he had stated 2014 was an important year because numerous European banks would have to begin to repay $1.3 trillion worth of loans these had received from the European Central Bank.

“This could precipitate a major global economic crisis-a third round of crisis after 2008 and 2011. I also asserted despite India’s current slowdown (growth in 2011-12 was 6.9 per cent), we will see Indian growth picking up slowly initially,” he said. He, however, added soon after the possible European crisis of 2014, India could emerge as the world’s fastest growing economy.

He regretted his comments on Europe in 2014 were juxtaposed with the Indian elections in 2014.